Distributed Ledger Technology and Fully Homomorphic Encryption: Next-Generation Information-Sharing for Supply Chain Efficiency

Information-sharing facilitates the coordination of supply chains and can be essential for enterprises’ survival. Studies have shown that supply chains benefit from the availability of aggregated information (e.g., inventory levels), as that would facilitate planning, inform decisions, and limit the emergence of operational distortions that result from the bullwhip effect and inefficient inventory allocation. Despite this, the degree of supply chain transparency within and across companies remains deficient at best, even as advancements in information and communication technology have facilitated secure information-sharing. What is more important is that companies have a direct incentive not to share certain operational attributes (e.g., inventory levels or sales, order sizes, wholesale prices). The issues resulting from technology limitations and irrational ordering- and allocation processes were brought into acute focus during the 2020 COVID-19 (C-19) pandemic, manifesting as persistent and global disruptions in supply operations and delivery delays. This chapter outlines promising approaches and methodologies for resolving these chronic shortcomings by leveraging both distributed ledger (“Blockchain”) technology (DLT) and the newly emerging capabilities of fully homomorphic encryption (FHE). By employing zero-trust information-sharing, we present an approach that combines DLT with FHE to bridge information-sharing limitations in hyperconnected supply chains without compromising data control. The chapter also introduces real-world applications of both DLT and FHE to illustrate their transformative potential. We conclude by highlighting the practical benefits of implementing both technologies, as well as the implications for broader adoption.